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eas the production organization is (1) performing within the limits established by management, (2) performing outside of and inferior to the limits established by management, or (3) performing outside of and superior to the limits established by management. Within the context of these three criteria, the performance level is important, regardless of what it may be. It is when the production process is found to be operating outside of and inferior to the limits established by management, however, that the most important and immediate managerial attention is required. Performance outside of and superior to the limits established by management may be cause for rewarding participants in the production process, revising standard costs, or a 4number of other actions; however, such performance is not immediately detrimental (and may not be detrimental at all) to the financial health of the organization. Similarly, performance within the limits established by management is never immediately threatening to an organization's financial health.

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